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5 Mistakes Usually Done By Businesses in Accounting

Last updated: 19 May, 2022 By | 6 Minutes Read

Maintaining correct accounting records is an essential function in every small to large business. It helps in keeping a proper record of the financial position of the business and also in preparing the tax returns in a proper manner. But quite often mistakes are made by the accountants while preparing the accounting records. These mistakes could lead to various complications which can disrupt the smooth running of the business.

Most Commonly Made Mistakes with Regards to Accounting

1. Not keeping a proper record of accounts receivable

Getting paid by the clients is the ultimate goal of any business organization. As soon as a payment is received, the invoice should be marked as paid. Sometimes by mistake, the accounts receivable are marked twice or left unmarked. This would lead to wastage of time, over payment of taxes, high bad debts etc.

By using accounting software, this problem can be sorted out and a proper record of accounts receivables can be maintained.

2. Not keeping a proper record of expenses

Many business owners don’t keep the records of their operational expenses properly. This can create problems related to taxation, accounting, cash flow etc. Sometimes mistakes are made while maintaining records of expenses paid by business card. In order to make sure that all the records of expenses are kept properly, each transaction must be noted at least once.

They should either be kept manually or in software. Various software like FreshBooks are ideal for keeping a proper record of the operational expenses of the business.

3. Not recording the cash expenses properly

Payment made through debit cards, credit cards and checks can easily be recorded using FreshBooks. But generally mistakes are made while recording cash transactions.

Proper methods should be developed for keeping these records otherwise it would lead to wrong maintenance of financial records of the business.

4. Not hiring professional taxation services

In small scale enterprises, owners try to reduce costs by preparing the tax returns themselves. By following the procedure on your own, you are bound to make mistakes which can lead to taxation penalties.

By hiring professional taxation services, these mistakes can be eliminated. Professional taxation services follow the latest regulations and are professionally managed.

5. Not being on the same page with your accountant

Showing lack of complete faith in the accountant can also lead to accounting mistakes. There are many cases of Small Business Accounting Firms owners interfering in the work of their accountants and asking them to follow different procedures.

An accountant should be given the freedom to work as per his will. Undue interference could lead to confusion and mistakes in the accounting process.

Keeping all the above-mentioned tips can help a business organization in maintaining accounting records properly. This will also help in keeping a proper record of the financial position of the business.

Read Also: Steps to be undertaken for Small business Accounting Procedures

Cogneessol is well known for offering excellent outsourcing accounting services to business organizations all over the world. Their services are meant for enabling business organizations to focus on core activities and optimize their profitability.

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